We are studying the interaction between retroviral envelope and receptor proteins, which mediate viral entry. In a related process, cells expressing retroviral envelope fuse with cells expressing retroviral receptor; this system models the spread of infectious agents by cell-cell contact. To better understand factors that modulate viral-mediated membrane fusion, we developed a quantitative assay that measures fusion between cells expressing the envelope of a model retrovirus (murine leukemia virus, MLV) and cells expressing the MLV receptor, mCAT1. The assay uses a luciferase reporter under the control of a tetracycline transactivator promotor in one cell, and a constitutively expressed tetracycline transactivator in the fusion partner cell. When these cells fuse, luciferase activity increases ~ 300 fold. Using the tretracycline transactivator is advantageous since this transactivator functions in a wide variety of cells, whereas the HIV tat gene, frequently used as transactivator in HIV fusion assays, does not work well in murine cells. To our knowledge, the tetracycline transactivator has not previously been used to detect cell fusion. Using this new assay system, we confirmed previous observations that cholesterol is required for efficient membrane fusion. We also showed, using transient transfections, that co-expression of receptor and envelope in the same cell blocks fusion due to intracellular degradation of receptor. Since we previously found that the MLV receptor interacts with the raft protein caveolin, we investigated the effect on fusion of over-expressing wild-type caveolin or dominant negative caveolin mutants. Preliminary experiments show that co-transfection of caveolin with receptor inhibits fusion by an as yet unexplained mechanism. These experiments lay the groundwork for using this assay system to screen for other genes that inhibit fusion. Conversely, using versions of MLV envelope that fail to fuse due to mutation of a critical N-terminal histidine, we confirmed an observation of others that fusion can be restored by adding a soluble form of MLV envelope (a portion of the SU envelope protein). This shows that our fusion assay can also be used to screen for genes or conditions that promote fusion when starting from sub-optimal fusion conditions. We performed a number of experiments to see if soluble HIV SU could complement non-fusing HIV envelope mutations or non-fusogenic envelope/co-receptor combinations, but so far have not found a comparable phenomenon for HIV. The HIV and MLV systems also differ in that C-terminal peptides from the HIV envelope TM inhibit fusion whereas a comparable peptide from MLV TM does not inhibit fusion in our system. The availability of a quantitative, reproducible fusion assay for MLV as well as HIV will allow identification of conserved features of their fusion mechanisms, and facilitate the search for interacting cell or viral genes that modulate fusion.